UPP 192 Instructions - University of Chicago

Nonresident Alien Tax-Withholding
• Wage payments: In order to receive wages, Nonresident aliens must have a valid US social security
number. Nonresident alien employees must follow special instructions when completing the IRS Form W-4.
Nonresident aliens must list themselves as “SINGLE” (regardless of actual marital status), with “1”
allowance, and request an additional amount of federal tax to be withheld from each check. Currently this
“additional amount” is $15.29 for employees paid on the biweekly pay schedule, or $33.13 for employees
paid on the monthly pay schedule.
In addition to the Federal tax withholding, the University also withholds state income tax. Illinois state tax is
generally withheld at the rate of 3%.
• Scholarship or fellowship stipends, and other miscellaneous payments: Scholarship or fellowship
stipends paid to Nonresident aliens are subject to a 14% federal tax-withholding rate. Other miscellaneous
payments to nonresidents are generally subject to a flat 30% federal tax-withholding rate (see TAX
TREATY EXEMPTIONS)
FICA TAX-WITHHOLDING
Social Security tax (also know as FICA) is an employment tax. FICA is withheld only from wage payments,
and is deducted in two components: Old Age, Survivors, Disability Insurance or OASDI (6.20%) and Medicare
(1.45%). FICA taxes will not be withheld from a student's wages when the student is registered and attending
classes at the University of Chicago, and works on a part-time basis.
FICA tax exemption for certain Nonresident aliens: Students who hold F-1 or J-1 classifications are
exempt from FICA tax withholding for the first five calendar years they are in the U.S. Professors and
researchers who hold J-1 classification are exempt from FICA tax withholding for the first two calendar years
they are in the U.S. It is the Payroll Department's responsibility to determine which employees should be
subject to FICA tax withholding during a particular calendar year.
Note: The term calendar year refers to the period of January 1 through December 31. If you are present in
the U.S. during any part of a particular calendar year, that year will count as one calendar year of U.S.
presence.
TAX TREATY EXEMPTIONS
Certain international visitors may be able to claim exemption from U.S. taxes based on a tax treaty agreement
between the U.S. and their home country. You should consult IRS Publication 901, U.S. Tax Treaties to see
if a treaty between the U.S. and your country of residence actually exists. If a treaty does exist, you should
determine if an article of the treaty covers the type of payment you will be receiving from the University, and if
you will be able to meet all the requirements of the treaty. If a tax treaty article does exist, and covers the
type of payment you will receive, you may claim the exemption from tax when you file your U.S. income U.S.
tax return treaty (see TAX FILING).
The IRS also allows you to claim tax exemption before the payment is made to you. To claim the exemption
from tax withholding, you must either have a permanent social security number (SSN) or an individual
taxpayer identification number (ITIN). (See note under Wages). Complete and submit the ORIGINAL forms to
the University of Chicago Payroll Department. (Faxed forms are not accepted.)
If you need to claim the exemption from tax-withholding for your:
Wages (i.e. part-time student employment, salaries of researchers or professors, etc.): Submit IRS Form
8233, Exemption from Withholding on Compensation for the Independent Personal Services of a Nonresident
Alien and revenue procedure statement 87-8 or 87-9 (contact Payroll for these forms). Note: Individuals who
have applied for SSN and receiving wages, but not yet received their SSN, can attach a copy of the SSN
application to the treaty forms to claim a treaty benefit.
Note: Individuals whom have applied for SSN and receiving wages, but not yet received their SSN, can
attach a copy of the SSN application to the treaty forms to claim a treaty benefit.
Rev. 10/01 2 UPP192_Notes